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Willis v. Smith

United States District Court, D. New Mexico

December 14, 2016

BOBBY L. WILLIS, individually and as trustee for the BOBBY L. WILLIS AND CARRIE S. WILLIS TRUST, WILLIS ASSET MANAGEMENT, LLC, JTB DEVELOPMENT PROPERTIES 3, LLC, and JTB DEVELOPMENT PROPERTIES 4, LLC, Plaintiffs,
v.
QUENTIN SMITH and STOREY & CLYDE, INC. Defendants, QUENTIN SMITH and STOREY & CLYDE, INC., Counterclaimants
v.
BOBBY WILLIS, Counterdefendant.

          MEMORANDUM OPINION AND ORDER

         In the COMPLAINT FOR FRAUD AND OTHER CLAIMS (Doc. No. 1-1) (Complaint) Plaintiffs Bobby L. Willis (Willis), individually and as trustee of the Bobby L. Willis and Carrie S. Willis Trust, Willis Asset Management, LLC, JTB Development Properties 3, LLC (JTB 3), and JTB Development Properties 4, LLC (JTB 4) (together, Plaintiffs) claim that Defendants Quentin Smith (Smith) and Storey & Clyde, Inc. (together, Defendants) fraudulently induced Plaintiffs to purchase several Rolex watches that were not genuine. Defendants ask the Court to dismiss all claims related to the purchase of the watches because Plaintiffs filed this lawsuit beyond the statute of limitations for claims involving the sale of goods under New Mexico's Uniform Commercial Code (UCC). See DEFENDANTS' FIRST MOTION TO DISMISS, SEEKING DISMISSAL OF ALL CLAIMS REGARDING ROLEX WATCHES, BASED ON STATUTE OF LIMITATION, STATUTE OF REPOSE, AND SPOLIATION OF EVIDENCE (Doc. No. 24) (Motion). Plaintiffs oppose the Motion. See RESPONSE TO DEFENDANTS' MOTION TO DISMISS CLAIM REGARDING ROLEX WATCHES (Doc. No. 31) (Response). Defendants replied to the Response in support of their Motion. See DEFENDANTS' REPLY TO THEIR FIRST MOTION TO DISMISS, SEEKING DISMISSAL OF ALL CLAIMS REGARDING ROLEX WATCHES, BASED ON STATUTE OF LIMITATION, STATUTE OF REPOSE, AND SPOLIATION OF EVIDENCE (Doc. No. 32) (Reply).

         To the extent that Plaintiffs claim that Defendants' sale of non-genuine Rolexes violates the New Mexico Uniform Commercial Code (UCC), that claim can be dismissed because Plaintiffs brought this suit more than nine years after Plaintiffs accepted delivery of the watches and more than three years after discovering the watches were not genuine. Because Plaintiffs' fraud claim was brought within the four-year New Mexico statute of limitations period, the Court will allow that claim to proceed.

         I. STANDARD OF REVIEW

         A. Legal Standard

         Defendants move to dismiss under Rule 12(b)(6). “The court's function on a Rule 12(b)(6) motion is . . . to assess whether the plaintiff's complaint alone is legally sufficient to state a claim for which relief may be granted.” Miller v. Glanz, 948 F.2d 1562, 1565 (10th Cir. 1991). In evaluating a Rule 12(b)(6) motion, the court must “accept as true all well-pleaded facts [in the complaint], as distinguished from conclusory allegations, and view the facts in the light most favorable to the nonmoving party. . . .” Archuleta v. Wagner, 523 F.3d 1278, 1283 (10th Cir. 2008) (quotation and alteration omitted). However, the court is under no obligation to accept bare conclusory allegations. Hall v. Belmon, 935 F.2d 1106, 1110 (10th Cir. 1991). Nor is the court required to accept legal conclusions without factual support. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). To summarize, a complaint must contain sufficient factual allegations “to raise a right to relief above the speculative level . . . on the assumption that all the allegations in the complaint are true.” Twombly, 550 U.S. at 555.

         B. Consideration of Exhibits to Complaint

         In deciding a Rule 12(b)(6) motion, courts typically consider only the facts alleged in the complaint. Martin v. Central States Emblems, Inc., 150 F. App'x 852, 857 (10th Cir. Oct. 11, 2005) (unpublished) (citing County of Santa Fe v. Pub. Serv. Co. of N.M., 311 F.3d 1031, 1035 (10th Cir. 2002)). However, if “matters outside the pleadings are presented to and not excluded by the court, the [Rule 12(b)(6)] motion must be treated as one for summary judgment under Rule 56. All parties must be given a reasonable opportunity to present all the material that is pertinent to the motion.” Fed.R.Civ.P. 12(d). Courts may review documents referred to in a complaint, without converting a motion to dismiss into a motion for summary judgment, if the documents are central to the plaintiff's claim and the parties do not dispute their authenticity. Martin, 311 F.3d at 1035 (citing County of Santa Fe).

         Only two of the many documents attached to Plaintiffs' Complaint are relevant to the Motion. (See generally, Compl. Exs. 1-24.) Exhibit 1 is a document which Plaintiffs identify as an invoice for the purchase of twenty-five PRE-OWNED ROLEX WATCHES-LOT NUMBER 2718 from Storey & Clyde, Inc. (Id.) Exhibit 1 is dated October 20, 2006, and the letterhead reads “Storey & Clyde, Inc., 318 South 19th Street, Suite # 102, Sparks, Nevada 89431.” The document has two columns; the first column is a list of twenty-five watches identified by a letter-number combination, and the second column contains a monetary amount for each watch. The total amount for all twenty-five watches is listed as $289, 742.80. In the Motion, Defendants assert that this document is a price list and not an invoice for the sale of watches. The Court will not consider Exhibit 1 because even though it appears to be central to Plaintiffs' fraud claim, Defendants dispute its authenticity and identity. Moreover, consideration of this exhibit is not necessary for ruling on the statute of limitations issue.

         Exhibit 2 to the Complaint purports to be an email message dated December 26, 2012 to Carrie Willis, Willis' wife, from Jim Wolf on behalf of Heritage Auctions. (Compl. Ex. 2.) Mr. Wolf reported that “all of the watches are non-genuine-not made by Rolex[, ]” and that Heritage could not auction the watches. (Id.) Plaintiffs point to Exhibit 2 as evidence that the watches they purchased from Defendants were fakes. Although Defendants deny that the watches sold to Willis were “fakes, ” Defendants do not directly attack the authenticity of Exhibit 2. Nevertheless, the Court need not consider it. The alleged inauthenticity of watches sold to Plaintiffs must be taken as true for purposes of ruling on the Motion.

         II. BACKGROUND

         Plaintiffs filed the Complaint on February 1, 2016 in the Eleventh Judicial District Court, San Juan County, New Mexico. The case was removed on March 8, 2016 based on diversity jurisdiction. 28 U.S.C. § 1332(a)(1). The following background facts are either alleged by the Complaint or may reasonably be inferred from the allegations in the Complaint.

         A. Purchase of Watches.[1]

         Smith appeared on an infomercial television program that broadcast nationwide entitled “Gemsmiths” in which Smith “made representations regarding the quality and values of gemstones and jewelry upon which Willis relied in making purchases from Quentin Smith's companies.” (Compl. ¶ 3.) Willis “relied upon the representations made by Quentin Smith and entered into a number of transactions with Quentin Smith to purchase gemstones, jewelry and watches beginning in 2006.” (Id. ¶ 4.) One of the purchases was for Rolex watches “for which Bobby Willis paid $ 289, 742.80 . . . .” (Id. ¶ 5.) Defendants admit “some watches were sold to Plaintiff Bobby Willis, [but Defendants] dispute the number of watches sold, the identity of the seller (the seller was Storey & Clyde, not Quentin Smith), . . . the purchase price, . . . and that the watches were ‘fakes' as alleged in the Complaint[.]” (Mot. at 2.)

         In Claim II Plaintiffs allege that they were defrauded by Defendants' “false appraisals of watches, jewelry and gemstones to which Bobby Willis and his related companies relied upon to their financial detriment.” (Id. ¶ 57A.) Essentially, the Complaint alleges the following factual basis for liability: (1) in 2006, after receiving appraisals from Defendants, Plaintiffs purchased several watches from Defendants; (2) the watches were delivered to Plaintiffs sometime in 2006; (3) in 2012, Plaintiffs sent several Rolex watches to an auction house; and (4) in December 2012, an agent of an auction house refused to sell those watches claiming they were not genuine Rolexes.

         B. Relevant Claims in the Complaint.

         Claim II is for fraud in “[p]roviding false appraisals of watches, jewelry and gemstones to which Bobby Willis and his related companies relied upon to their financial detriment[.]” (Compl. ¶ 57A.) Claim XI is for prima facie tort alleging that Smith and Garner intentionally caused harm to Plaintiffs, and that claim is asserted in the alternative. Although Claim III alleges a claim for breach of contract, no reference is made to the breach of a purchase agreement concerning the watches. (See Compl. ΒΆΒΆ 60-69.) Thus, the Court will not address Claim III in this opinion. However, to avoid confusion about what ...


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